In many areas this past June and July, the average temperature was 2–3 degrees warmer than the last decade. Not surprisingly, the overall electrical consumption went up by 5% for June 2024 versus June 2023, according to the Energy Information Administration. Astoundingly, some customers saw their electric bills double—or more—for the summer months.

One such area is southern New Jersey, where angry consumers have gotten the attention of lawmakers to investigate why. Lots of theories abound, but few, if any, seem to have looked into the facts based on some simple math.

First, some general information from various sources.

• The average electric bill in New Jersey is approximately $119.96 per month.
• A typical household in New Jersey paid 17.59 cents per kilowatt-hour (kWh) and used 682 kWh per month.
• The 73.6°F average was 3.3°F above normal for June in the state. The average high of 85.1°F was 4.1°F above normal, and the average low of 62°F was 2.4°F above normal.
• Between June and July, Atlantic City Electric (AEC) reported residential customers used 20% more electricity compared to 2023.
• Residential sales of kilowatt-hours versus dollars for June 2024 versus June 2023 show a 5.2% increase in kilowatt-hours with a 7.4% increase in cost in the United States, while New Jersey kilowatt-hours went up 43% in the same period.
• On June 1, rate increases in New Jersey were 4.6% for AEC, 6.2% for PSE&G and 8.6% for Jersey Central Power & Light.
• The Department of Energy estimates savings of about 1% for each degree of thermostat adjustment per 8 hours.

What accounts for the increase? 

Based on this information, one might expect the average bill to increase due to more energy consumption (+43%), higher rates (+6%) and higher temperatures (+6%), or 55% overall. As a point of reference, my electric bill went up 47% year over year for June, though my kilowatt-hour consumption was only up 35%. So what accounts for the difference in my bill, and even more so for the people whose bills went up by hundreds of dollars?

Examining the electric bill

For this, we must look more closely at the electric bill. A typical residential bill has several key numbers. There is the use in kilowatt-hours, which usually is broken into two or more parts. The wording in the bill is “for the first,” and “for the next,” which have different rate multipliers based on total kilowatt-hours. 

In addition, there are two sets of charges: one for “delivery” and one for “supply.” Not surprisingly, in the winter months in New Jersey (without electric heat), many consumers only have values in the first category or limit (600 kWh in my bill). In a hot summer, the for-the-next limit kilowatt-hour portion may be larger than for-the-first. 

Also not surprising, the rate per kilowatt-­hour is higher in the higher levels (+6.5%). Another factor is that the supply charges have a higher rate than the delivery charge. This rate also varies with the time of year (+47% for delivery and +11% for supply for February, compared to June).

Another factor not shown in the bill is the difference between the outside temperature and thermostat’s setting. Though experts say the ideal setting is 78°F, at most houses I generally see it set to 72°F or lower. When the outside temperature is above the thermostat setting for 18 hours or more in a day, the AC unit runs much more than 8 hours. That’s the number used in the typical savings statements that every degree you raise the temperature can translate to about a 3%–5% reduction in your energy consumption. In reverse, lowering the thermostat causes a 3%–5% increase for each degree. Depending on the residence’s insulation and the HVAC unit’s efficiency, the unit can run continuously when the differential of outside to thermostat setting is too great.

For my June bill, there were more kilowatt­-hours in the higher rate category, hence a higher bill. I knew my bill was going up due to the rate increase and the high heat, so I raised my thermostat setting 4°F during the extended hot spell. I made sure unnecessary loads were turned off, since they also generate heat the HVAC must deal with, and kept blinds and curtains closed. Hence, my increase wasn’t 200% or more as others’ were. Unfortunately, I wasn’t able to obtain year-over-year information for residences with those huge bills to do the same math exercise.

While I stand by the premise in an article I wrote for ELECTRICAL CONTRACTOR 12 years ago that smart meters were being installed by electric utilities so they can eventually raise revenue through real-time pricing of electricity use (see “Truth or Dare,” October 2012), this isn’t the case in New Jersey. The newly installed meters are tested against ANSI standards to accurately read kilowatt-hours. The rest is just in the math.

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